Aero Motoreycles is considering opening a new manufacturing facifity in Fort Worth to meet the demand for a new line of solar-charged motoreycles (who wisnts to ride on s cloudy day ampway? The proposed project has the following festures; - The firm just spent $300,000 for a murketing study to determine consumer dernand (0 t=0). - Acro Motorcycles purchased the land the factory will be built on 5 vears ago for $2,000,000 and owns it outright (that is, it does not have a mortgage). The Land has a current market value of $2.633.816. - The project has an initial cost of $20,000,000 (excluding land, hint: the land is not subject to depreclation). - If the project is undertaken, at t=0 the company will need to increase its irmentories by $3,500,000, accounts receivable by $1,500,000, and its accounts payable by $2,000,000. This net operating working capital will be recovered at the end of the project's life it - 10A - If the project is undertaken, the compary will realize an additional $8,000,000 in sales over each of the next ten years. 0. .e. sales in each year are $0.000,000) - The company's operating cost (not including depreciationd will equal 50% of sales. - The company's tax rate is 35 percent - Use a 10-year straight-line depreciation schedule. - At t=10, the project is expected to cease being economically viable and the factory fincluding land will be sold for $4,500,000 (assume tand has a book value equal to the original purchase price). - The prolect's WACC =10 percent - Assume the firm is profitable and able to use any tax credits lie. negative tawes). What is the project's NPV? Round to nearest whole dollar value. Aero Motoreycles is considering opening a new manufacturing facifity in Fort Worth to meet the demand for a new line of solar-charged motoreycles (who wisnts to ride on s cloudy day ampway? The proposed project has the following festures; - The firm just spent $300,000 for a murketing study to determine consumer dernand (0 t=0). - Acro Motorcycles purchased the land the factory will be built on 5 vears ago for $2,000,000 and owns it outright (that is, it does not have a mortgage). The Land has a current market value of $2.633.816. - The project has an initial cost of $20,000,000 (excluding land, hint: the land is not subject to depreclation). - If the project is undertaken, at t=0 the company will need to increase its irmentories by $3,500,000, accounts receivable by $1,500,000, and its accounts payable by $2,000,000. This net operating working capital will be recovered at the end of the project's life it - 10A - If the project is undertaken, the compary will realize an additional $8,000,000 in sales over each of the next ten years. 0. .e. sales in each year are $0.000,000) - The company's operating cost (not including depreciationd will equal 50% of sales. - The company's tax rate is 35 percent - Use a 10-year straight-line depreciation schedule. - At t=10, the project is expected to cease being economically viable and the factory fincluding land will be sold for $4,500,000 (assume tand has a book value equal to the original purchase price). - The prolect's WACC =10 percent - Assume the firm is profitable and able to use any tax credits lie. negative tawes). What is the project's NPV? Round to nearest whole dollar value
